Jobseekers face a severe new penalty regime in Tuesday’s budget, part of a welfare crackdown that includes trialling drug tests on some new dole recipients and extending the use of cashless welfare cards.

The proposed demerit point system aims to raise $632m by docking welfare payments for failure to meet “mutual obligations”, such as taking a suitable job or attending a meeting. The budget also promises to tackle Centrelink call centre wait times and to streamline prosecutions for welfare fraud using information given to the Department of Human Services.

Budget papers said the new demerit point system would provide vulnerable people with support and include individualised assessments to ensure financial penalties were not imposed unfairly. The measure was estimated to achieve “efficiencies” of $632m over five years from 2016-17.

Morrison said the government aimed to “support jobseekers affected by drug and alcohol abuse but, to protect taxpayers, it has to be a two-way street”.

Being drunk or drug-affected will not be accepted as an excuse for repeat offenders for failing to meet mutual obligations.

He announced a “modest” trial of drug testing for 5,000 new welfare recipients. Dole recipients who fail tests will be given a cashless welfare card, subjected to further tests and possibly be referred to treatment.

The Greens leader, Richard Di Natale, said the principle welfare recipients would face “compulsory drug testing before you get the support you deserve” amounted to a “deprivation of liberty”.

He said drug testing set a “dangerous precedent” and questioned whether accessing government services like Medicare could require drug testing in future. Di Natale said he would seek advice on its legality.

Cassandra Goldie, chief executive of the Australian Council of Social Services, said she was “bitterly disappointed” the government was targeting unemployed people on social security.

“Let’s look at what we can do together to help people who are unemployed in Australia, rather than continue to create this notion that if you’re on social security it’s your fault and we’re going to look to get harsher and harsher on you.”

Morrison also said the government would “deny welfare for a disability caused solely by their own substance abuse”.

A Department of Social Services official told Guardian Australia the measure actually consisted of closing a loophole that allowed people to claim the disability support pension solely on the base of substance abuse. People with disabilities will still qualify by showing lack of capacity such as brain damage or lost organ function, even where it is caused by substance abuse.

Morrison said the government would restore the pensioner concession card to people affected by pension assets test change introduced earlier in the year. The $3.1m measure will reinstate access to commonwealth subsidised hearing services and state and territory concessions.